An Asset Other Than a Passenger Automobile Is Placed in Service

question 16

Multiple Choice

An asset other than a passenger automobile is placed in service on May 15, 2014 and has a depreciable basis of $36,000. The asset is in the 7-year recovery class. What is the maximum depreciation deduction that may be claimed for 2014, excluding the election to expense and bonus depreciation?

• A)$2,572
• B)$5,144
• C)$25,000
• D)$36,000
• E)None of the above

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials.

Fixed Costs

Expenditures that do not change over a short period of time, regardless of the level of production or activity.

Break-even Point

The financial point at which total costs and total sales are equal, resulting in no net loss or gain for the business.

Variable Costs

These are costs that vary directly with the level of production or sales volume.